Since 1 January 2026, the UAE has taxed sweetened drinks in a new way. Under Cabinet Decision No. 197 of 2025, the flat 50% excise rate on sweetened drinks has been replaced by a tiered, volume-based model linked to sugar content. For producers and importers, it changes how the tax is calculated, what data they need and, potentially, how they formulate their products.
The new rates
| Category | Sugar and sweeteners per 100 ml | Excise tax |
|---|---|---|
| High sugar | 8 g or more | AED 1.09 per litre |
| Moderate sugar | 5 g or more, but less than 8 g | AED 0.79 per litre |
| Low sugar | Less than 5 g | AED 0 per litre |
| Artificially sweetened only | — | AED 0 per litre |
Energy drinks are not part of the new model. They remain taxed at 100% of the excise price. Tobacco products also remain at 100%.
What has changed in practice
Under the old model, excise tax on sweetened drinks depended on price. Now it depends on volume and sugar content. That means:
- excise tax per unit can go up or down depending on the product;
- product data about sugar content must be accurate and supported; and
- reformulating a product to move it into a lower tier can reduce the tax.
Who should act
- Producers need to classify each product and keep evidence of its sugar content.
- Importers need the same information from their suppliers, before goods arrive.
- Distributors and retailers should expect price changes on some lines.
What to do now
- Review your product list and confirm the tier for each drink.
- Update your product registrations with the FTA as required.
- Check your systems calculate excise per litre correctly, with VAT charged on top.
- Revisit pricing and formulation for products near a tier boundary.
If you would like help reviewing your products under the new rules, please get in touch.
This article is general information based on the rules as we understand them at the date of publication. It is not advice on your circumstances. Laws and practice change, so please speak to us before acting on it.
